Hong Kong’s SFC steps in to halt ICO

An investigation by Hong Kong’s Securities and Futures Commission (SFC) has led to the halt and unwinding of an initial coin offering (ICO) by Black Cell Technology Limited (Black Cell) to the Hong Kong public on the basis that Black Cell potentially engaged in unauthorized promotional and unlicensed regulated activities. Black Cell promoted the token sale through its website and stated that the ICO proceeds would be used to fund the developments of a mobile application and token holders would be eligible to redeem equity shares of Black Cell. According to the SFC, this arrangement could constitute a collective investment scheme (CIS) (which requires authorization by the SFC if sold to the retail public). In addition, an interest in a CIS is considered a “security” under the Hong Kong rules. This appears to have been a clear-cut case of a violation of existing financial services legislation in Hong Kong and comes at a time of increased regulatory scrutiny…

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